Florida | 59-3305930 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2). |
Emerging growth company ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description of Exhibit | |
99.1 | News release dated June 27, 2017, entitled “Darden Restaurants Reports Fiscal 2017 Fourth Quarter and Full Year Results; Fourth Quarter Same-Restaurant Sales Growth of 3.3%; and Increases Quarterly Dividend 12.5 %.” |
DARDEN RESTAURANTS, INC. | |
By: | /s/ Ricardo Cardenas |
Ricardo Cardenas | |
Senior Vice President and Chief Financial Officer |
Exhibit Number | Description of Exhibit | |
99.1 | News release dated June 27, 2017, entitled “Darden Restaurants Reports Fiscal 2017 Fourth Quarter and Full Year Results; Fourth Quarter Same-Restaurant Sales Growth of 3.3%; and Increases Quarterly Dividend 12.5 %.” |
Contacts: | ||||
(Analysts) Kevin Kalicak | (407) 245-5870 | |||
(Media) Rich Jeffers | (407) 245-4189 |
• | Total sales from continuing operations increased 8.1% to $1.93 billion |
• | Reported diluted net earnings per share from continuing operations decreased 10.0% to $0.99 and were negatively impacted by $0.19 due to: |
◦ | A non-cash accounting charge of approximately $0.10 related to the early settlement of a portion of our pension plan commitments |
◦ | Approximately $0.09 of transaction and integration expenses related to the April 24, 2017 acquisition of Cheddar's Scratch Kitchen |
• | Adjusted diluted net earnings per share from continuing operations increased 7.3% to $1.18* |
• | The Company repurchased approximately $15 million of its outstanding common stock |
• | Same-restaurant sales increased 3.3% for the quarter, excluding Cheddar's Scratch Kitchen |
+4.4% for Olive Garden | +0.5% for The Capital Grille | +0.1% for Yard House | |||
+3.5% for LongHorn Steakhouse | +3.3% for Eddie V’s | -1.3% for Seasons 52 | |||
+1.4% for Bahama Breeze |
• | Total sales from continuing operations increased 3.4% to $7.17 billion |
• | Reported diluted net earnings per share from continuing operations increased 37.8% to $3.83 |
• | Adjusted diluted net earnings per share from continuing operations increased 13.9% to $4.02* |
• | The Company repurchased approximately $230 million of its outstanding common stock |
• | Same-restaurant sales increased 1.8% for the year, excluding Cheddar's Scratch Kitchen |
+2.6% for Olive Garden | +0.4% for The Capital Grille | -0.2% for Yard House | |||
+1.2% for LongHorn Steakhouse | +1.5% for Eddie V’s | 0.0% for Seasons 52 | |||
+2.2% for Bahama Breeze |
Q4 Sales | Q4 Segment Profit | |||||||||||
($ in millions) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||
Consolidated Darden | $1,934.6 | $1,790.2 | 8.1% | |||||||||
Olive Garden | $1,027.3 | $981.8 | 4.6% | $204.3 | $189.9 | 7.6% | ||||||
LongHorn Steakhouse | $436.6 | $413.2 | 5.7% | $83.4 | $78.4 | 6.4% | ||||||
Fine Dining | $139.1 | $131.6 | 5.7% | $28.4 | $26.4 | 7.6% | ||||||
Other Business | $331.6 | $263.6 | 25.8% | $57.8 | $49.8 | 16.1% |
Annual Sales | Annual Segment Profit | Real Estate Impact* | ||||||||||||
($ in millions) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||
Consolidated Darden | $7,170.2 | $6,933.5 | 3.4% | |||||||||||
Olive Garden | $3,938.6 | $3,838.6 | 2.6% | $761.8 | $759.2 | 0.3% | $(37.8) | |||||||
LongHorn Steakhouse | $1,622.2 | $1,587.7 | 2.2% | $280.9 | $275.3 | 2.0% | $(10.2) | |||||||
Fine Dining | $535.6 | $514.1 | 4.2% | $105.0 | $100.5 | 4.5% | $(0.2) | |||||||
Other Business | $1,073.8 | $993.1 | 8.1% | $182.0 | $168.1 | 8.3% | $(2.7) |
Olive Garden | March | April | May | Q4 | FY2017 |
Same-Restaurant Sales | 4.9% | 3.8% | 4.4% | 4.4% | 2.6% |
Same-Restaurant Traffic | 2.6% | 1.7% | 1.7% | 2.0% | 0.2% |
Pricing | 1.7% | 1.7% | 1.7% | 1.7% | 1.6% |
Menu-mix | 0.6% | 0.4% | 1.0% | 0.7% | 0.8% |
LongHorn Steakhouse | March | April | May | Q4 | FY2017 |
Same-Restaurant Sales | 3.8% | 1.8% | 4.6% | 3.5% | 1.2% |
Same-Restaurant Traffic | 2.8% | 0.5% | 2.8% | 2.1% | (0.4)% |
Pricing | 1.3% | 1.3% | 1.3% | 1.3% | 1.6% |
Menu-mix | (0.3)% | 0.0% | 0.5% | 0.1% | 0.0% |
• | Same-restaurant sales growth of 1.0% to 2.0% |
• | New restaurant openings of 35 to 40 restaurants |
• | Total sales growth of 11.5% to 13.0% |
• | Total capital spending of $400 to $450 million |
• | Total inflation of approximately 2.0% |
• | Adjusted diluted net earnings per share from continuing operations of $4.38 to $4.50, excluding approximately $0.06 to $0.08 of Cheddar's integration related expenses* |
• | Approximately 127 million diluted average common shares outstanding for the year |
Fiscal Q4 Reported to Adjusted Earnings Reconciliation | |||||||||||||||||
Q4 2017 | Q4 2016 | ||||||||||||||||
$'s in millions, except EPS | Earnings Before Income Tax | Income Tax Expense | Net Earnings | Diluted Net Earnings Per Share | Earnings Before Income Tax | Income Tax Expense | Net Earnings | Diluted Net Earnings Per Share | |||||||||
Reported Earnings from Continuing Operations | $158.7 | $33.3 | $125.4 | $0.99 | $175.4 | $35.0 | $140.4 | $1.10 | |||||||||
% Change vs Prior Year | (10.0 | )% | |||||||||||||||
Adjustments: | |||||||||||||||||
Pension settlement charge | 19.9 | 7.6 | 12.3 | 0.10 | — | — | — | — | |||||||||
Cheddar's acquisition and integration expenses | 15.5 | 4.4 | 11.1 | 0.09 | — | — | — | — | |||||||||
Real estate plan implementation | — | — | — | — | 2.0 | 1.8 | 0.2 | — | |||||||||
Adjusted Earnings from Continuing Operations | $194.1 | $45.3 | $148.8 | $1.18 | $177.4 | $36.8 | $140.6 | $1.10 | |||||||||
% Change vs Prior Year | 7.3 | % |
Annual Reported to Adjusted Earnings Reconciliation | |||||||||||||||||
2017 | 2016 | ||||||||||||||||
$'s in millions, except EPS | Earnings Before Income Tax | Income Tax Expense | Net Earnings | Diluted Net Earnings Per Share | Earnings Before Income Tax | Income Tax Expense | Net Earnings | Diluted Net Earnings Per Share | |||||||||
Reported Earnings from Continuing Operations | $637.3 | $154.8 | $482.5 | $3.83 | $449.7 | $90.0 | $359.7 | $2.78 | |||||||||
% Change vs Prior Year | 37.8 | % | |||||||||||||||
Adjustments: | |||||||||||||||||
Pension settlement charge | 19.9 | 7.6 | 12.3 | 0.10 | — | — | — | — | |||||||||
Cheddar's acquisition and integration expenses* | 16.3 | 4.8 | 11.5 | 0.09 | — | — | — | — | |||||||||
Debt retirement costs | — | — | — | — | 106.9 | 40.9 | 66.0 | 0.51 | |||||||||
Real estate plan implementation | — | — | — | — | 48.0 | 14.9 | 33.1 | 0.26 | |||||||||
Strategic action plan and other costs | — | — | — | — | — | 3.0 | (3.0 | ) | (0.02 | ) | |||||||
Adjusted Earnings from Continuing Operations | $673.5 | $167.2 | $506.3 | $4.02 | $604.6 | $148.8 | $455.8 | $3.53 | |||||||||
% Change vs Prior Year | 13.9 | % |
Reconciliation of Fiscal 2018 Reported to Adjusted Earnings Outlook | |||||
2018 | |||||
Reported diluted net earnings per share from continuing operations | $4.30 | to | $4.44 | ||
Cheddar's integration related expenses | 0.13 | 0.10 | |||
Income tax expense | (0.05 | ) | (0.04 | ) | |
Adjusted diluted net earnings per share from continuing operations | $4.38 | to | $4.50 | ||
5/28/17 | 5/29/16 | |||
Olive Garden1 | 846 | 843 | ||
LongHorn Steakhouse | 490 | 481 | ||
Cheddar's Scratch Kitchen | 140 | — | ||
Yard House | 67 | 65 | ||
The Capital Grille | 56 | 54 | ||
Bahama Breeze | 37 | 37 | ||
Seasons 52 | 41 | 40 | ||
Eddie V's | 18 | 16 | ||
Darden Continuing Operations | 1,695 | 1,536 | ||
1Includes six locations in Canada for all periods presented. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
5/28/2017 | 5/29/2016 | 5/28/2017 | 5/29/2016 | ||||||||||||
Sales | $ | 1,934.6 | $ | 1,790.2 | $ | 7,170.2 | $ | 6,933.5 | |||||||
Costs and expenses: | |||||||||||||||
Food and beverage | 557.5 | 517.0 | 2,070.3 | 2,039.7 | |||||||||||
Restaurant labor | 603.1 | 556.9 | 2,265.3 | 2,189.2 | |||||||||||
Restaurant expenses | 335.8 | 308.4 | 1,265.2 | 1,163.5 | |||||||||||
Marketing expenses | 64.3 | 63.4 | 239.7 | 238.0 | |||||||||||
General and administrative expenses | 133.3 | 90.7 | 387.7 | 384.9 | |||||||||||
Depreciation and amortization | 70.4 | 66.8 | 272.9 | 290.2 | |||||||||||
Impairments and disposal of assets, net | — | 1.9 | (8.4 | ) | 5.8 | ||||||||||
Total operating costs and expenses | $ | 1,764.4 | $ | 1,605.1 | $ | 6,492.7 | $ | 6,311.3 | |||||||
Operating income | 170.2 | 185.1 | 677.5 | 622.2 | |||||||||||
Interest, net | 11.5 | 9.7 | 40.2 | 172.5 | |||||||||||
Earnings before income taxes | 158.7 | 175.4 | 637.3 | 449.7 | |||||||||||
Income taxes | 33.3 | 35.0 | 154.8 | 90.0 | |||||||||||
Earnings from continuing operations | $ | 125.4 | $ | 140.4 | $ | 482.5 | $ | 359.7 | |||||||
Earnings (loss) from discontinued operations, net of tax expense (benefit) of $(2.0), $0.5, $(4.2) and $3.4, respectively | (1.6 | ) | (0.8 | ) | (3.4 | ) | 15.3 | ||||||||
Net earnings | $ | 123.8 | $ | 139.6 | $ | 479.1 | $ | 375.0 | |||||||
Basic net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 1.00 | $ | 1.11 | $ | 3.88 | $ | 2.82 | |||||||
Earnings (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | (0.03 | ) | 0.12 | ||||||||
Net earnings | $ | 0.99 | $ | 1.10 | $ | 3.85 | $ | 2.94 | |||||||
Diluted net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 0.99 | $ | 1.10 | $ | 3.83 | $ | 2.78 | |||||||
Earnings (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | (0.03 | ) | 0.12 | ||||||||
Net earnings | $ | 0.98 | $ | 1.09 | $ | 3.80 | $ | 2.90 | |||||||
Average number of common shares outstanding: | |||||||||||||||
Basic | 125.0 | 126.4 | 124.3 | 127.4 | |||||||||||
Diluted | 126.6 | 128.2 | 126.0 | 129.3 | |||||||||||
5/28/2017 | 5/29/2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 233.1 | $ | 274.8 | |||
Receivables, net | 75.9 | 64.0 | |||||
Inventories | 178.9 | 175.4 | |||||
Prepaid income taxes | 6.2 | 46.1 | |||||
Prepaid expenses and other current assets | 80.7 | 76.4 | |||||
Deferred income taxes | 211.8 | 163.3 | |||||
Assets held for sale | 13.2 | 20.3 | |||||
Total current assets | $ | 799.8 | $ | 820.3 | |||
Land, buildings and equipment, net | 2,272.3 | 2,041.6 | |||||
Goodwill | 1,201.7 | 872.3 | |||||
Trademarks | 950.2 | 574.6 | |||||
Other assets | 280.2 | 273.8 | |||||
Total assets | $ | 5,504.2 | $ | 4,582.6 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 249.5 | $ | 241.9 | |||
Accrued payroll | 149.1 | 135.1 | |||||
Accrued income taxes | 1.9 | — | |||||
Other accrued taxes | 54.2 | 49.1 | |||||
Unearned revenues | 388.6 | 360.4 | |||||
Other current liabilities | 445.9 | 400.6 | |||||
Total current liabilities | $ | 1,289.2 | $ | 1,187.1 | |||
Long-term debt, less current portion | 936.6 | 440.0 | |||||
Deferred income taxes | 357.5 | 255.2 | |||||
Deferred rent | 282.8 | 249.7 | |||||
Other liabilities | 536.4 | 498.6 | |||||
Total liabilities | $ | 3,402.5 | $ | 2,630.6 | |||
Stockholders’ equity: | |||||||
Common stock and surplus | $ | 1,614.6 | $ | 1,502.6 | |||
Retained earnings | 560.1 | 547.5 | |||||
Treasury stock | (7.8 | ) | (7.8 | ) | |||
Accumulated other comprehensive income (loss) | (62.9 | ) | (87.0 | ) | |||
Unearned compensation | (2.3 | ) | (3.3 | ) | |||
Total stockholders’ equity | $ | 2,101.7 | $ | 1,952.0 | |||
Total liabilities and stockholders’ equity | $ | 5,504.2 | $ | 4,582.6 |
Twelve Months Ended | |||||||
5/28/2017 | 5/29/2016 | ||||||
Cash flows—operating activities | |||||||
Net earnings | $ | 479.1 | $ | 375.0 | |||
(Earnings) losses from discontinued operations, net of tax | 3.4 | (15.3 | ) | ||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||
Depreciation and amortization | 272.9 | 290.2 | |||||
Stock-based compensation expense | 40.7 | 37.3 | |||||
Change in current assets and liabilities and other, net | 122.1 | 133.2 | |||||
Net cash provided by operating activities of continuing operations | $ | 918.2 | $ | 820.4 | |||
Cash flows—investing activities | |||||||
Purchases of land, buildings and equipment | (293.0 | ) | (228.3 | ) | |||
Proceeds from disposal of land, buildings and equipment | 8.3 | 325.2 | |||||
Cash used in business acquisitions, net of cash acquired | (764.4 | ) | — | ||||
Purchases of capitalized software and changes in other assets, net | (22.5 | ) | (21.5 | ) | |||
Net cash provided by (used in) investing activities of continuing operations | $ | (1,071.6 | ) | $ | 75.4 | ||
Cash flows—financing activities | |||||||
Proceeds from issuance of common stock | 113.1 | 99.3 | |||||
Income tax benefits credited to equity | 27.2 | 17.5 | |||||
Special cash distribution from Four Corners Property Trust | — | 315.0 | |||||
Dividends paid | (279.1 | ) | (268.2 | ) | |||
Repurchases of common stock | (230.2 | ) | (184.8 | ) | |||
ESOP note receivable repayment | 0.8 | 0.6 | |||||
Repayment of long-term debt | — | (1,096.8 | ) | ||||
Proceeds from issuance of long-term debt | 500.0 | — | |||||
Payment of debt issuance costs | (4.4 | ) | — | ||||
Principal payments on capital and financing leases | (3.9 | ) | (3.4 | ) | |||
Proceeds from financing lease obligation | 5.7 | — | |||||
Net cash provided by (used in) financing activities of continuing operations | $ | 129.2 | $ | (1,120.8 | ) | ||
Cash flows—discontinued operations | |||||||
Net cash used in operating activities of discontinued operations | (18.3 | ) | (42.4 | ) | |||
Net cash provided by investing activities of discontinued operations | 0.8 | 6.3 | |||||
Net cash used in discontinued operations | $ | (17.5 | ) | $ | (36.1 | ) | |
Decrease in cash and cash equivalents | (41.7 | ) | (261.1 | ) | |||
Cash and cash equivalents - beginning of period | 274.8 | 535.9 | |||||
Cash and cash equivalents - end of period | $ | 233.1 | $ | 274.8 |
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